VOICE OF THE PEOPLE (letter)

Keep ICC as overseers of electrical industry

November 29, 2005|By Ralph Yaniz, State director, AARP Illinois

Chicago — I would like to respond to "Purchasing electricity" (Voice of the people, Nov. 6), the letter from Lester Crown and other members of the Steering Committee of the Civic Committee of the Commercial Club of Chicago. It did not describe the issues with the reverse auction system being proposed by the electrical companies and the ultimate adverse impact on all consumers.

With rates frozen for the last nine years, Illinois' electrical companies still reported sizable profits. Faced with having to prove to the Illinois Commerce Commission that current electrical rates are too low for them to make a reasonable rate of return, electrical companies have proposed scrapping the entire current review system. They want to end the ICC's authority to set electrical rates.

Electrical companies have also argued that the 1997 restructuring law guaranteed them deregulation of residential service in 2007. In 1997, lawmakers and regulators believed competition for residential customers was just around the corner. Well, the crystal ball was wrong. Without a strongly competitive market, deregulation would mean that residential customers would be at the mercy of a virtually unregulated monopoly

AARP and other consumer advocacy groups have argued in favor of keeping the Illinois Commerce Commission's oversight in place. In response, electrical companies put a multimillion-dollar ad campaign on TV and radio that has frightened customers. Ironically these same companies have accused the consumer advocates of "selling fear" for simply speaking the truth.

Electrical companies have argued that their proposal would allow them to buy low-cost electricity and pass these savings on to residential customers. Yet Illinois' nuclear plants--which Illinois customers paid for--produce some of the lowest-cost electricity in the nation. Experts project that the auction proposal would result in a rate hike of as much as 35 percent.

Under their proposal, even if they found electricity to buy for less than 2 cents per kilowatt hour, there is no guarantee that any savings would be passed on to the customer. With the Illinois Commerce Commission's oversight role eliminated, no one, except them, would know.

Unless the Illinois Commerce Commission's role is maintained in setting residential electrical rates and overseeing the procurement of power, many residential customers will suffer. The very old and the very young will have to make some very tough choices.

Contrary to the recent media accounts, AARP has put forward an alternative to the auction proposal. It is simply to maintain the cost-based rate setting system that has worked in Illinois for decades. We urge policymakers to reject the auction proposal and stand with residential customers.